Our new analysis suggests that country risk premiums are often set too high by industry analysts, leading to overvaluation—and missed investment opportunities. In this Brazilian example, the difference between S&P 500 and Bovespa price/earnings ratios can be explained entirely by performance. Investors take heed: a risk premium for an emerging-market company may not always be necessary.
To read the article, see “Don’t overthink your approach to valuation in emerging markets,” July 15, 2021.